Posted by Randy (SD) on December 21, 2003 at 16:46:05:
Learn how to do flips properly, and you won?t have to worry about ?Dealer Status? or qualifying for financing or down payments and you can off-set any potential income tax with valid business deductions (mostly usual & customary expenses you?re already paying).
Dealer/Investor Status and Taxes - Posted by freeman
Posted by freeman on December 21, 2003 at 16:38:31:
I’m a newbie, and had planned on doing rehabs and retail flips. Wanted my profit fast instead of seeing it trickle in each month as a landlord. But, how about this approach to avoid the dealer status. Say I buy an REO for 50K, needs 10K in rehab and closing costs. Now I’ve got 60K in it. Now I go out and either get a renter or a tb for a lo. Then go to the bank and get it financed at 70K. I can then pay myself back the 60K that I have in it plus write myself a check for 10K profit. How is the 10K profit taxed? If I hold for 2 years and then sell will this method allow me to pull out my profit up front, but not have to pay taxes on that profit for two years at the time of selling it? And, at investor rates to bout? Thanks for your help.